Objectives: To explore the variation in understanding, attitudes and uptake of COVID-19 health advice during the 2020 pandemic lockdown by health literacy. Study design: National cross sectional community survey. Setting: Australian general public. Participants: Adults aged over 18 years (n=4362). Main outcome measures: Knowledge, attitudes and behaviours related to COVID-19; health literacy and socio-demographic factors. Results: People with inadequate health literacy had poorer understanding of COVID-19 symptoms (49% vs 68%; p<0.001), were less able to identify behaviours to prevent infection (59% vs 72%; p<0.001), and experienced more difficulty finding information and understanding government messaging about COVID-19 than people with adequate health literacy. They were less likely to rate social distancing as important (6.1 vs 6.5, p<0.001) and reported more difficulty remembering/accessing medication since lockdown (3.6 vs 2.7, p<0.001). Importantly there was higher endorsement of misinformation beliefs related to COVID-19 and vaccination in people with lower health literacy. Similar results were observed among people who primarily speak a language other than English at home. Conclusion: Our findings show important disparities by health literacy and language in COVID-19 related knowledge, attitudes and behaviours that have the potential to undermine efforts to reduce viral transmission and may lead to social inequalities in health outcomes in Australia. Those with the greatest burden of chronic disease are most disadvantaged, and most likely to experience severe disease and die from COVID-19. Addressing the health literacy needs of the community in public health messaging about COVID-19 must now be a priority in Australia.